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3 Stocks to Buy From the Prospering Electric Power Industry
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The Zacks Utility – Electric Power industry provides electricity to millions of customers across the United States. Companies in this industry are steadily transitioning to cleaner fuel sources and actively working to reduce carbon emissions, aided by supportive government policies that promote sustainable power generation. Alongside their commitment to renewable energy, utilities are investing heavily in upgrading the grid and improving transmission and distribution infrastructure. These efforts are particularly important in preparing for the disruptions caused by hurricane seasons, as stronger infrastructure enhances system resilience, reduces outages, and allows for quicker restoration of power following severe weather events.
CenterPoint Energy Inc. (CNP - Free Report) , with its systematic capital expenditure to upgrade infrastructure and maintain the reliability of its electric, gas and steam delivery systems, offers an excellent opportunity to stay invested in the utility space. Other mature utilities worth adding to your portfolio are Fortis Inc. (FTS - Free Report) and NiSource Inc. (NI - Free Report) .
About the Electric Power Industry
The Utility – Electric Power industry encompasses the generation, transmission, distribution, storage, and retail of electricity to consumers. Typically, demand for utility services remains stable across economic cycles, with exceptions arising from unusual weather patterns. Periods of extreme heat or cold tend to push electricity consumption higher. The industry is undergoing a notable transformation, with a growing number of companies committing to zero-emission objectives. The rapid increase in global Internet usage and the projected rise of artificial intelligence (AI) are expected to significantly boost electricity demand, as AI processes require far more power than conventional online activities like music streaming or photo browsing. A decline in interest rates is also a favorable development for this capital-intensive industry.
3 Trends Shaping the Future of the Utility - Electric Power Industry
Interest Rate Decline is a Tailwind: To fund maintenance, upgrades, and expansion efforts, utility companies often turn to capital markets for financing. The Federal Reserve’s series of rate hikes had raised the benchmark interest rate to the 5.25-5.50% range, creating headwinds for the industry. However, the Fed has since shifted its stance, cutting rates by 100 basis points and bringing the benchmark down to 4.25-4.50%. This policy reversal is a positive development for capital-intensive, domestically oriented utilities, as lower borrowing costs help alleviate financial strain. The rate decline is particularly advantageous for companies planning substantial infrastructure investments. Additional rate cuts anticipated in the second half of 2025 are expected to further benefit utility operators.
Increasing Production and Prices for Electricity: Per the U.S. Energy Information Administration (EIA), to cater to the rising electricity demand in the United States, particularly from the commercial and industrial sectors, the electric power sector is projected to generate 2.2% more electricity in 2025 compared to 2024. This production growth is expected to continue, with a further 2.3% increase anticipated in 2026. raising the volume to 4,340 billion kilowatt-hours. The development of large data centers in the United States is also increasing the electricity demand, and Artificial Intelligence (AI) based data centers consume more power than traditional data centers. Per EIA, the price of average electricity to be provided to customers in the industrial, commercial and residential sectors will increase by 3.4%, 3.96% and 3.88% respectively. The same trend is expected to continue in 2026 as well, boosting revenues of the companies operating in this space.
Transition Toward Cleaner Sources to Generate Power: The operators in the U.S. electric power sector are gradually moving toward cleaner sources of energy. Per the EIA, the annual share of U.S. electricity generation from renewable energy sources will rise from 23% in 2024 to 25% in 2025 and touch 26% in 2026 as a result of the continuing addition of solar and wind-generating capacity. The passage of the Inflation Reduction Act should support and accelerate the utilities’ transition toward clean energy sources. It has removed the uncertainties relating to federal incentives provided for the use of renewable sources. The act entails an opportunity for a wide range of low-cost clean energy solutions in a predictable way for a long time and will create earnings visibility.
Zacks Industry Rank Indicates Bright Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates upbeat near-term prospects. The 60-stock Utility-Electric Power industry is housed within the broader Zacks Utilities sector and currently carries a Zacks Industry Rank #86, which places it in the top 35% of more than 246 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate.
Before we present a few Utility - Electric Power stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and current valuation.
Electric Power Industry Lags S&P 500 But Beats Sector
The Utility Electric Power industry has lagged the Zacks S&P 500 but outperformed its own sector over the past 12 months. The industry has gained 16.9% compared with its sector’s 14.2% rally. The Zacks S&P 500 composite has gained 22.7% in the same period.
Price Performance (One year)
Electric Power Industry's Current Valuation
On the basis of EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) TTM, which is a commonly used multiple for valuing Utility Electric Power companies, the industry is trading at 14.37X compared with the S&P 500’s 17.02X and the Utility sector’s 15.75X.
Over the past five years, the industry has traded as high as 21.19X, as low as 11.96X and at the median of 15.32X.
Industry EV/EBITDA TTM vs S&P 500 (5yrs)
Industry EV/EBITDA TTM vs Sector (5yrs)
3 Electric Power Industry Stocks to Accumulate
Utilities is a mature sector, and all the stocks selected from the Zacks Utility Electric Power industry have a market capitalization of more than $20 billion. The stocks currently have a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
CenterPoint Energy: Houston, TX-based CenterPoint Energy provides electric transmission & distribution, natural gas distribution and competitive natural gas sales and services operations. CenterPoint Energy is investing to expand its operations to meet increasing electricity demand, backed by expanding commercial activity. In the next 10 years, the company plans to invest $53 billion to strengthen and expand its operations further.
The company’s long-term (three to five years) earnings growth is pegged at 7.8%. CNP’s current dividend yield is 2.3%, better than the S&P 500’s yield of 1.47%. The Zacks Consensus Estimate for CenterPoint Energy’s 2025 and 2026 earnings suggests year-over-year growth of 8.02% and 7.43%, respectively.
Price and Consensus: CNP
Fortis Inc.: This Saint John's, Canada, based company operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries. For the 2025-2029 period, the company expects to make investments of $26 billion. The majority of its planned capital expenditure will be directed to strengthen regulated electric and gas operations.
The company’s long-term earnings growth is pegged at 5.13%. FTS’ current dividend yield is 3.53% The Zacks Consensus Estimate for Fortis’ 2025 and 2026 earnings indicates year-over-year growth of 4.18% and 4.02%, respectively.
Price and Consensus: FTS
NiSource Inc.: This Merrillville, IN-based energy holding company, together with its subsidiaries, provides natural gas, electricity and other products and services in the United States. It also projected an investment of $19.4 billion for the 2025-2029 period to further strengthen and expand its existing operations.
The company’s long-term earnings growth is pegged at 7.88%. NI’s current dividend yield is 2.58% The Zacks Consensus Estimate for NiSource’s 2025 and 2026 earnings reflects year-over-year growth of 7.43% and 7.87%, respectively.
Price and Consensus: NI
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3 Stocks to Buy From the Prospering Electric Power Industry
The Zacks Utility – Electric Power industry provides electricity to millions of customers across the United States. Companies in this industry are steadily transitioning to cleaner fuel sources and actively working to reduce carbon emissions, aided by supportive government policies that promote sustainable power generation. Alongside their commitment to renewable energy, utilities are investing heavily in upgrading the grid and improving transmission and distribution infrastructure. These efforts are particularly important in preparing for the disruptions caused by hurricane seasons, as stronger infrastructure enhances system resilience, reduces outages, and allows for quicker restoration of power following severe weather events.
CenterPoint Energy Inc. (CNP - Free Report) , with its systematic capital expenditure to upgrade infrastructure and maintain the reliability of its electric, gas and steam delivery systems, offers an excellent opportunity to stay invested in the utility space. Other mature utilities worth adding to your portfolio are Fortis Inc. (FTS - Free Report) and NiSource Inc. (NI - Free Report) .
About the Electric Power Industry
The Utility – Electric Power industry encompasses the generation, transmission, distribution, storage, and retail of electricity to consumers. Typically, demand for utility services remains stable across economic cycles, with exceptions arising from unusual weather patterns. Periods of extreme heat or cold tend to push electricity consumption higher. The industry is undergoing a notable transformation, with a growing number of companies committing to zero-emission objectives. The rapid increase in global Internet usage and the projected rise of artificial intelligence (AI) are expected to significantly boost electricity demand, as AI processes require far more power than conventional online activities like music streaming or photo browsing. A decline in interest rates is also a favorable development for this capital-intensive industry.
3 Trends Shaping the Future of the Utility - Electric Power Industry
Interest Rate Decline is a Tailwind: To fund maintenance, upgrades, and expansion efforts, utility companies often turn to capital markets for financing. The Federal Reserve’s series of rate hikes had raised the benchmark interest rate to the 5.25-5.50% range, creating headwinds for the industry. However, the Fed has since shifted its stance, cutting rates by 100 basis points and bringing the benchmark down to 4.25-4.50%. This policy reversal is a positive development for capital-intensive, domestically oriented utilities, as lower borrowing costs help alleviate financial strain. The rate decline is particularly advantageous for companies planning substantial infrastructure investments. Additional rate cuts anticipated in the second half of 2025 are expected to further benefit utility operators.
Increasing Production and Prices for Electricity: Per the U.S. Energy Information Administration (EIA), to cater to the rising electricity demand in the United States, particularly from the commercial and industrial sectors, the electric power sector is projected to generate 2.2% more electricity in 2025 compared to 2024. This production growth is expected to continue, with a further 2.3% increase anticipated in 2026. raising the volume to 4,340 billion kilowatt-hours. The development of large data centers in the United States is also increasing the electricity demand, and Artificial Intelligence (AI) based data centers consume more power than traditional data centers. Per EIA, the price of average electricity to be provided to customers in the industrial, commercial and residential sectors will increase by 3.4%, 3.96% and 3.88% respectively. The same trend is expected to continue in 2026 as well, boosting revenues of the companies operating in this space.
Transition Toward Cleaner Sources to Generate Power: The operators in the U.S. electric power sector are gradually moving toward cleaner sources of energy. Per the EIA, the annual share of U.S. electricity generation from renewable energy sources will rise from 23% in 2024 to 25% in 2025 and touch 26% in 2026 as a result of the continuing addition of solar and wind-generating capacity. The passage of the Inflation Reduction Act should support and accelerate the utilities’ transition toward clean energy sources. It has removed the uncertainties relating to federal incentives provided for the use of renewable sources. The act entails an opportunity for a wide range of low-cost clean energy solutions in a predictable way for a long time and will create earnings visibility.
Zacks Industry Rank Indicates Bright Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates upbeat near-term prospects. The 60-stock Utility-Electric Power industry is housed within the broader Zacks Utilities sector and currently carries a Zacks Industry Rank #86, which places it in the top 35% of more than 246 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate.
Before we present a few Utility - Electric Power stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and current valuation.
Electric Power Industry Lags S&P 500 But Beats Sector
The Utility Electric Power industry has lagged the Zacks S&P 500 but outperformed its own sector over the past 12 months. The industry has gained 16.9% compared with its sector’s 14.2% rally. The Zacks S&P 500 composite has gained 22.7% in the same period.
Price Performance (One year)
Electric Power Industry's Current Valuation
On the basis of EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) TTM, which is a commonly used multiple for valuing Utility Electric Power companies, the industry is trading at 14.37X compared with the S&P 500’s 17.02X and the Utility sector’s 15.75X.
Over the past five years, the industry has traded as high as 21.19X, as low as 11.96X and at the median of 15.32X.
Industry EV/EBITDA TTM vs S&P 500 (5yrs)
Industry EV/EBITDA TTM vs Sector (5yrs)
3 Electric Power Industry Stocks to Accumulate
Utilities is a mature sector, and all the stocks selected from the Zacks Utility Electric Power industry have a market capitalization of more than $20 billion. The stocks currently have a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
CenterPoint Energy: Houston, TX-based CenterPoint Energy provides electric transmission & distribution, natural gas distribution and competitive natural gas sales and services operations. CenterPoint Energy is investing to expand its operations to meet increasing electricity demand, backed by expanding commercial activity. In the next 10 years, the company plans to invest $53 billion to strengthen and expand its operations further.
The company’s long-term (three to five years) earnings growth is pegged at 7.8%. CNP’s current dividend yield is 2.3%, better than the S&P 500’s yield of 1.47%. The Zacks Consensus Estimate for CenterPoint Energy’s 2025 and 2026 earnings suggests year-over-year growth of 8.02% and 7.43%, respectively.
Price and Consensus: CNP
Fortis Inc.: This Saint John's, Canada, based company operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries. For the 2025-2029 period, the company expects to make investments of $26 billion. The majority of its planned capital expenditure will be directed to strengthen regulated electric and gas operations.
The company’s long-term earnings growth is pegged at 5.13%. FTS’ current dividend yield is 3.53% The Zacks Consensus Estimate for Fortis’ 2025 and 2026 earnings indicates year-over-year growth of 4.18% and 4.02%, respectively.
Price and Consensus: FTS
NiSource Inc.: This Merrillville, IN-based energy holding company, together with its subsidiaries, provides natural gas, electricity and other products and services in the United States. It also projected an investment of $19.4 billion for the 2025-2029 period to further strengthen and expand its existing operations.
The company’s long-term earnings growth is pegged at 7.88%. NI’s current dividend yield is 2.58% The Zacks Consensus Estimate for NiSource’s 2025 and 2026 earnings reflects year-over-year growth of 7.43% and 7.87%, respectively.
Price and Consensus: NI